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What exactly is the "iCLAT" in the compelling current planning world of charitable lead trusts?

December 12, 2017

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What exactly is the "iCLAT" in the compelling current planning world of charitable lead trusts?

December 12, 2017

What is an "iCLAT"?  It is simply another name for the "reversionary" form of charitable lead annuity trust, which is a "grantor trust" for federal income tax purposes.  As some of you may already understand, reversionary charitable lead trusts (CLTs) have been around for decades and are much easier to establish, explain and administer in comparison to traditional CLTs. This is because reversionary CLTs (i.e. "iCLATs"), which simply revert back to the donor at the end of charitable term, are primarily used for INCOME TAX SAVINGS PURPOSES, while traditional CLTs are designed with much more complicated estate tax savings objectives in mind.  In fact, the "i" in iCLAT stands for "i"ncome tax savings, and it's overall donor-centered focus - rather than the "estate tax efficient transfer of wealth to the next generation," which is so often the primary focus of traditional CLTs.  

 

As the IRS §7520 interest rate remains at historically low levels, all forms of CLTs will continue to generate large accelerated income tax savings.  However, the iCLAT is the simpler CLT alternative if the primary objective is to unlock these valuable accelerated income tax savings for you, your clients, or the donors of your charitable organization (many of whom no longer have to worry about estate taxes due to the higher estate tax exemption levels).  As a result, the iCLAT's more focused income tax savings approach ERASES SO MUCH OF THE "MAZE-LIKE" COMPLEXITY OF TRADITIONAL CLTs.  The complexity inherent in traditional "wealth transfer" CLTs is often too large of barrier for even the most talented planners to overcome with their clients and donors.  This is precisely why we all have seen so many compelling articles written about the power of CLTs during this absolutely perfect low interest rate environment, but so few CLTs have actually been implemented. 

 

The simplicity of the iCLAT is the primary reason that it should be considered by planners and charitable organizations in 2017 and 2018.   The iCLAT's simplicity saves tremendous time and expense which, in turn, increases the likelihood of the establishment of the CLT for the donor and the recipient charities.  Whether the iCLAT is coupled in the same year of a donor's ROTH IRA conversion, sale of business/property, large bonus/commission/contingency fee compensation, or other significant income tax event, the iCLAT can be a powerful income tax savings tool for many individuals (and other donor taxpayers, such as corporations, partnerships, LLCs and even other trusts).  This is particularly true for those donors who already regularly give in excess of $10,000 per year to charity, and thus, already fit the ideal donor profile for a CLT.  Of course, from the perspective of the recipient charities (which can include donor advised funds), the iCLAT is also a powerful tool to use to better secure, and even increase, the levels of annual gifts from current and prospective donors. 

 

If you have an interest in learning more about the iCLAT please email us at info@iclat.net, call us at (844) 46-iCLAT, or visit our website www.iclat.net.  We also have a Frequently Asked Questions (FAQ's) page of on website. If you have a particular client or donor whom you think could benefit from an iCLAT in 2017 or 2018, you can also click here for the "Forms" page of our website, which has our General Inquiry Form, iCLAT Scorecard Evaluator, and our more comprehensive iCLAT Intake Form.  Each of these forms can be completed on an anonymous basis if you prefer.  We also have several upcoming FREE conference calls (listen only) scheduled at Noon (EST) on December 15th, 19th and 21st.  There are several spots remaining for each call.  Send us an email at info@iclat.net if you want to register for the conference call, there is no obligation and no personal information will be obtained during these conference calls.  The sole purpose of these conference calls is to further explain the benefits of the iCLAT.  Believe it or not, because of the iCLAT's simplicity, there is still time to establish and fund an iCLAT before the end of the year and receive the accelerated charitable income tax deduction on your 2017 tax return - however, time is running out.

 

Written by Bradford B. Gornto, Esq. LL,M., President and Founder of Effectual Giving, LLC & Gornto Law, PLLC.  All rights reserved.  iCLAT is a registered trademark of Effectual Giving, LLC.  

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